Question

operstion staff are the people actually doing the job in each of the cost centres. these people are in the best postion to identify problems constraints or issues relating to current job costing budgets and to advise financial personnel of requirements for future budgets - to help prioritise resource needs for the next job costinf exercise. they should be included in consultative processes for advising on cost information when formulating budgets. Comment on this statement and the implications for expense in the organisation

Answer 1

It is recommended that operational staff should be included in consultative processes for advising on cost information due to the following reasons.

1. Nowadays the operating staff is expanded in the form of strategic consulting services as earlier the services of this staff are limited to managing day to day operating activities.
2. Operation staff in the organization is linked with each department of the firm as it handles day to day operations of the firm and due to this, operating staff has practical experience in managing costs and supposed to be an asset as it provides advice to management to choose the accurate imperative decision.

Therefore, the Operating cost center is included in budgeting expenses. Consultations during the making of financial plans act as a key to the effectiveness of the cost center. During the execution of the plan, the operational staff provides the information needed to improve or correct the plans discussed by the management. Therefore, the direct link between operating and financial staff encourages the cost-effective utilization of resources and thus helps in reducing expenses and costs.